Illinois tax officials have published draft regulations outlining how the state's 0.2% digital asset transaction tax will apply to various cryptocurrency activities, including stablecoins and decentralized finance (DeFi) platforms.
The draft rules clarify that stablecoins will be classified as taxable digital assets, while non-fungible tokens (NFTs) will be exempt from this tax. This distinction aims to streamline the tax implications for different types of digital assets.
Under the proposed guidelines, most DeFi transactions will be exempt from the tax unless they involve fees deemed as "valuable consideration," such as protocol fees. However, network fees and swap fees paid to liquidity providers will not trigger taxation.
Additionally, crypto bridging activities will be considered taxable exchanges when conducted through a digital asset broker for a fee. Transfers from centralized exchanges to self-custody wallets may also incur taxes if the exchange charges a fee for the transfer.
Approved in June, the Digital Asset Tax Act is set to take effect on January 1, 2027. The Illinois Department of Revenue is currently accepting public comments on the draft rules until October 30.